December 31, 2013

2014 – The year several key health reform provisions take effect

The PPACA comes to a crescendo in 2014. Many key changes that are expected to get health insurance to millions of uninsured Americans, improve care and reduce costs begin.

The year’s provisions are:

HEALTH INSURANCE MARKETPLACES/EXCHANGES: On January 1, 2014, states are required to establish health care exchanges where individuals and small employers can evaluate and purchase health insurance. In 2017, states may allow large employers (more than 100 employees) to purchase insurance through exchanges.

Health care reform establishes exchanges to offer affordable health insurance and makes it easy for people to purchase.

A state may defer to the federal government to establish an exchange for its citizens. Or, a state may develop an exchange in partnership with the federal government and take advantage of processes and systems being developed for the federal exchange.

There are many details for the states and the Department of Health and Human Services to work on before 2014.

INDIVIDUAL MANDATE: The PPACA requires all U.S. citizens and legal residents to have minimum essential coverage in 2014. People who do not have coverage will be taxed monthly on their annual incomes taxes. There are a few exceptions to the penalty.

Plans that stay grandfathered are not required to follow this rule. Large group plans will be affected if they offer any essential health benefits.

NO PRE-EXISTING CONDITIONS FOR ALL AGES: Beginning January 1, 2014 all individual and group health insurance plans are not allowed to deny coverage to enrollees based on a pre-existing condition. The ban includes benefit limitations and coverage denials.

Grandfathered plans for individuals are exempt from this rule.

CLINICAL TRIALS: With health care reform, plans can’t deny people from participating in clinical trials. They can’t limit coverage of routine patient costs for items and services in connection with the trial. The PPACA says that they must not discriminate against a policyholder because of a clinical trial.

Approved clinical trials are phase I, II, III or IV clinical trials that are for prevention, detection or treatment of cancer or another life-threatening disease.

Grandfathered plans do not have to follow this rule. However, Cigna plans to adopt expanded coverage for clinical trials as standard policy for all insured and self-insured plans.

NO DOLLAR LIMITS ON ESSENTIAL HEALTH BENEFITS: Annual limits on the dollar value of essential health benefits ends in 2014.

In-network copays, deductibles and coinsurance must count toward the OOP maximum. Mental health/substance abuse must be included, even if provided by a different carrier. Additional benefits such as prescription drugs carved out to other vendors/carriers do not have to be coordinated until 2015.

Beginning in 2015, the family OOP maximum cannot be more than two times the individual OOP maximum.

Grandfathered plans are exempt.

Deductibles

In-network deductibles for insured small group plans cannot exceed $2,000 individual/$4,000 family for Essential Health Benefits. These limits will be adjusted annually.

Grandfathered plans are exempt.

WELLNESS PROGRAM INCENTIVES: The maximum wellness program reward is 30% of the total cost of medical coverage, including both employer and employee contributions.

The maximum reward may be increased to 50% for programs related to tobacco use.

Rewards can be provided through premium discounts or surcharges, reduced costs or enhanced benefits.

GUARANTEED AVAILABILITY/RENEWABILITY: Each carrier offering fully insured health insurance coverage in the individual or group market must accept every individual and group in the state that applies for coverage.

The carrier must renew or continue coverage at the plan sponsor or individual’s choice. Grandfathered plans are exempt.

WAITING PERIODS: With reform, group health plans and group health insurance carriers can’t require an insurance coverage waiting period of more than 90 days.

AUTO ENROLLMENT: Implementation delayed until regulatory guidance is issued by DOL in 2014 or later.

Employers with more than 200 full-time employees that offer one or more health benefit plans must:

Automatically enroll new full-time employees in one of the plans

Continue the enrollment of current enrollees

Give employees adequate notice and an opportunity to opt-out or change plans

HEALTH INSURANCE INDUSTRY FEE: This fee on health insurers, including HMOs, is based on each insurer’s share among all health insurers of U.S. health risks. It starts at $8 billion in 2014 and increases year over year before reaching $14.3 billion in 2018.